$7.5 million goes to whistle-blower Military contractor overbilled Pentagon $77 million in '80s

July 15, 1992|By New York Times News Service

NEW YORK -- A former employee of a military contractor in upstate New York was awarded $7.5 million yesterday by a federal judge for bringing forward evidence that the company had systematically defrauded the Pentagon in the 1980s.

The award, made to Christopher M. Urda, 35, an auditor from Binghamton, N.Y., is the largest to date under a federal law that was revised in 1986 to encourage whistle-blowers to come forward with allegations of wrongdoing by government contractors.

U.S. District Judge Con Cholakis in Albany made the award to Mr. Urda as part of an agreement calling for the contractor and its current and former owners to pay the government $55.9 million to settle civil charges that the company had overbilled the Pentagon on more than $1 billion worth of contracts.

Mr. Urda had asserted in a civil suit filed in 1989 that the company had routinely inflated its cost estimates on contracts for flight simulators between 1980 and 1988, and that as a result the Pentagon had been overcharged by $77 million. Under provisions of the whistle-blower law, the suit was later taken over by the Justice Department, which conducted its own investigation.

The contractor, now known as the CAE-Link Corp., based in Binghamton, was owned during almost all of the period covered in the suit by the Singer Corp.

Singer, which at the time was controlled by the financier Paul Bilzerian, sold the Link division in 1988 to CAE Industries Ltd. of Toronto. Singer subsequently changed its name to the Bicoastal Corp. and lapsed into bankruptcy proceedings for reasons unrelated to the charges against Link.

Last week, a federal grand jury in Binghamton indicted Bicoastal and five former executives at the flight simulator division on criminal fraud charges related to the reported over billing. The company and the executives -- who include two former division presidents, Charles Monachello and George Barna -- said they would fight the charges.

The settlement of the civil charges is the latest in a string of cases filed under the Federal False Claims Act, which was intended to encourage whistle-blowers by offering them a portion of any money recovered by the government as a result of fraud charges they bring forward.

The largest previous settlement was by Textron Inc., which agreed two years ago to pay the government $17.9 million to settle a whistle-blower's charges that it had supplied faulty engines to the Coast Guard.

The General Electric Co. is expected to agree within several weeks to settle fraud charges brought by a whistle-blower against its military jet-engine division for about $70 million.

Dozens of other False Claims Act cases, many of which remain underseal, have been lodged against military contractors and are working their way through the federal courts.

The False Claims Act, which is based on an 1863 law that was updated in 1986, provides for whistle-blowers to receive as much as 25 percent of any money recovered by the government as a result of evidence they bring forward. The exact compensation is set by the federal judge overseeing the case.

Mr. Urda filed the suit after leaving Link for a job as price analyst for the Defense Department. In his suit,he described trying in vain to interest the Pentagon in pursuing the evidence against Link. Mr. Urda still works for the Defense Contract Audit Agency in Binghamton.

Mr. Urda will share an undisclosed but substantial portion of his award with his lawyers, who are led by John R. Phillips of Los Angeles. In addition, the lawyers and Taxpayers Against Fraud, a public-interest group set up to support whistle-blowers, will also share in more than $1.5 million in fees awarded by the court as part of the settlement.